Full demand recovery to take couple of more quarters

Slow consumption growth continues to be a cause of worry for most consumer companies. However, they have been able to cash in on the growing wealth at the top end of the consumer section by launching premium products. In an interaction with Dipak Mondal, Dabur India Chairman Mohit Burman says though rural demand continues to lag urban demand, the gap between urban and rural demand has shrunk significantly.

While rural India had been a key driver of growth for the FMCG industry till a few years back, rural demand dropped below urban demand in the previous financial year due to the high inflationary environment. New-age channels like modern trade and e-commerce drove urban growth over the past year. While syndicated data shows rural demand continues to lag urban demand, the gap between urban and rural has shrunk significantly, showing a sequential revival in demand from the hinterland.

That said, Dabur has seen demand from the hinterland return to the growth trajectory and outpace urban demand in the third quarter of this fiscal. Rural growth for Dabur was 200 bps higher than urban growth in Q3. This is a result of several initiatives that we have rolled out to seed demand in the hinterland. We have been investing in expanding our rural footprint, which has grown from 100,000 in March 2023 to 117,000 in December 2023. We are working towards ending this financial year with a rural coverage of 1.2 lakh villages. Even syndicated data shows Dabur’s rural distribution has grown the highest among FMCG peers, giving us a distinct advantage and helped us reap the benefits of improvement in rural consumer sentiments.

We have also expanded our product basket in the rural market by way of newer affordable and rural-specific packs across categories to feed these markets and push demand growth. We have invested in consumer activations in rural India to better reach out to consumers in the hinterland, giving them an opportunity to touch, feel and experience our products.